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Implementation Completion Report (ICR) Review - Transport Rehabilitation

1. Project Data:   
ES Date Posted:
Project Name:
Transport Rehabilitation
Project Costs(US $M)
 242  299.85
Loan/Credit (US $M)
 150  150
Sector, Major Sect.:
Cofinancing (US $M)
 38  51.79
L/C Number:
Board Approval (FY)
Partners involved
KfW, OPEC, Japanese Trust Fund 
Closing Date
12/31/1999 06/30/2000
Prepared by: Reviewed by: Group Manager: Group:  
Kavita Mathur
Anwar M. Shah Alain A. Barbu OEDST

2. Project Objectives and Components:

a. Objectives
The main objectives of the project were to :

(1) rehabilitate essential transport infrastructure;
(2) assist Government in implementing institutional reforms in the road and railway subsectors, aiming at improved resource use and sustainable development; and
(3) lay the ground work for future projects focusing on strengthened road management, increased private participation in the transport sector, and improved mobility of the poor.

b. Components
To achieve the objectives described above, the project included the following components:

      • road rehabilitation and maintenance
      • railway privatization and rehabilitation
      • runway rehabilitation at Lima Airport
      • pilot project for non-motorized transport in Lima
      • technical assistance and training
Revised Components
Without changing the project objectives, the components cost and physical targets were revised in March 1996. The reallocation was done because of increase in road rehabilitation cost and restructuring of the runway rehabilitation component. The road component was increased from the original appraisal estimate of US$153.32 million to US$227.94 million, while the airport component was reduced to US$11.65 million from the planned US$30.2 million. The road maintenance works program was canceled and US$10.8 million were reallocated. Only US$300,000 of this sub-component was disbursed to finance a pilot road maintenance program study.

c. Comments on Project Cost, Financing and Dates
The actual cost of the project is US$299.8 million compared to appraisal estimate of US$242 million. The Government counterpart funds increased from US$47.9 million to US$98.06 million. Cofinancing increased from US$38 million to US$51.79 million. The credit was fully disbursed. The project closed on June 30, 2000, six months after the original closing date.

3. Achievement of Relevant Objectives:

The project achieved most of its objectives.
  • The revised physical targets for rehabilitation of transport infrastructure were met. The project supported rehabilitation of 589 km of roads and 44 bridges. Airport runway was rehbilitated and taxiway was repaired.
  • The capacity of Ministry of Transport, Communications (MTC) for road network planning, contracting out works to private sector, performing quality control, and conducting environmental analysis was improved. Transport law was approved and a master plan for Civil Aviation was developed. Urban Transport Council for Metropolitan Lima was created to address urban transport problems. A Bridge Management System was developed.
  • National Traffic Safety Council with a traffic safety unit was created to implement road safety pilot activities including national traffic sign manual and manuals for road safety education for primary and secondary schools.
  • The project supported private participation in the transport sector through: (i) concessioning of National Railway Company to private concessionaire; (ii) concessioning of airport; and (iii) contracting out of road works to the private sector.
  • The project promoted use of bicycles by low-income residents by constructing dedicated bicycle ways and establishing a revolving fund for purchase of bicycles by low-income workers.

4. Significant Outcomes/Impacts:

The significant impacts of the project are:
  • concessioning of National Railway Company (ENAFER) to private concessionaire;
  • concessioning of airport; and
  • promotion of traffic safety with the creation of National Traffic Safety Council and its traffic safety unit.

  • 5. Significant Shortcomings (include non-compliance with safeguard features):

    The quality of feasibility studies and designs for road rehabilitation works was inadequate. This resulted in significant cost overruns during the implementation phase. Also, the road maintenance works program had to be canceled.
    6. Ratings:ICROED ReviewReason for Disagreement/Comments
    Institutional Dev.:
      The ID impact is assessed as substantial because: (a) railway was restructured and concessioned; (b) airport was concessioned; and (c) MTC capacity for road network planning, contracting out works to private sector and conduct environmental analysis has substantially improved.
    Bank Performance:
    Borrower Perf.:
    Quality of ICR:

    7. Lessons of Broad Applicablity:

    The ICR identifies the following lessons with broad applicability:
    • It is important that Bank management provide greater oversight during the preparation phase and monitor the feasibility and design studies to ensure high quality and to avoid wastage of resources.
    • The Bank should promote the use of post-qualification of bids instead of pre-qualification where there are limited number of local contractors. During the execution of the bridge component, there was collusion of prequalified bidders. As a result, the financial bids received were significantly higher than expected.
    • For countries with limited institutional capacity in the transport sector, projects addressing various modes (ranging from roads, railways and airports) are too complex. Smaller and more focused projects that involve fewer implementing agencies may be more suitable.

    8. Audit Recommended?  Yes

              Why?  To examine and draw lessons from the privatization experience in the transport sector in Peru.

    9. Comments on Quality of ICR:

    The ICR is of good quality. It is clearly written, and covers all the relevant and important issues.

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